Research from the Australian National University (ANU) indicates the global economy could lose up to $21.8 trillion USD in 2020 alone, due to the coronavirus pandemic.
The researchers, led by Professor Warwick McKibbin and Roshen Fernando, modelled six new scenarios of the impact of COVID-19 on the world economy, with the ‘best case’ scenario a hit to the global economy of $14.7 trillion USD.
“That’s a massive hit, and that loss is based on the worst of COVID-19 being over by mid-2020 but with a smaller second wave in 2021,” Professor McKibbin said.
“Our modelling shows that if the virus isn’t contained or if we have ongoing waves, the economic losses will climb quite steeply. The more waves we have, the more losses we can expect.
“By our fourth scenario, which sees two waves of COVID-19 in 2020 and another two in 2021, the loss rises to $US21.8 trillion,” he said.
“There is no doubt that COVID-19 is a significant negative shock to the world economy, and our modelling makes that clear.”
The scenarios ranged from containing the virus in mid-2020 to ongoing waves of the virus over several years. The researchers also modelled the total loss to the world economy between 2020 and 2025; these scenarios saw the initial impact of the virus have an ongoing ‘ripple effect’ over five years, due to “sustained declines in economic activity”.
The modelling showed a cumulative loss to Australia’s economy of between $151.6 billion to $306.6 billion USD between 2020 and 2025.
“The current experience with the COVID-19 pandemic has revealed deep problems in existing institutions at the supernational level and within countries,” Professor McKibbin said.
“While policies need to be designed and implemented at the national level, for most foreseeable problems, there needs to be greater cooperation across countries. COVID-19 shows the folly of isolationist politics and policies when the natural world ignores artificial boundaries.”
The researchers have created an online dashboard to display their results.